On September 2, Beijing time, Beijing Automotive BluePark (600733.SZ), a listed A-share company, announced that its subsidiary Beijing Electric Vehicle (BJEV), intended to publicly list and increase its capital by up to 10 billion yuan. After introducing strategic investors, Beijing Automotive BluePark would remain the controlling shareholder of BJEV. However, the announcement stated that the investors for the capital increase had not yet been determined.

According to financial reports, Beijing Automotive BluePark has incurred a cumulative loss of 25.161 billion yuan over the past four and a half years. By increasing the capital of its wholly-owned subsidiary BJEV, Beijing Automotive BluePark is clearly aiming to enhance the company's financial strength and better promote the Enjoy World brand, a new brand launched in collaboration with Huawei's Intelligent Selection model. Prior to the capital increase, Beijing Automotive BluePark directly held 99.99% of BJEV's equity and indirectly held 0.01% through Beijing BluePark ARCFOX Technology Co., Ltd., amounting to a total of 100% ownership.

According to the assessment report issued by Beijing Tianjian Xingye Assets Appraisal Co., Ltd., which was released concurrently with the announcement, the financial data of BJEV, the subject of the transaction, as of June 30, 2024, are as follows: operating revenue of 4.527 billion yuan, net profit of -1.124 billion yuan, total assets of 29.105 billion yuan, and total liabilities of 22.724 billion yuan.

The asset appraisal value of 100% equity of BJEV is 25.716 billion yuan, with a registered capital of 10.798 billion yuan. The price for new strategic investors to increase their capital will not be lower than the registered appraisal result, and the subscription of new registered capital of BJEV will not exceed approximately 4.199 billion yuan for a total capital increase of up to 10 billion yuan.

Got up early but arrived late

Beijing Automotive BluePark was the first automaker to cooperate with Huawei, without a doubt.

As early as September 2017, Beijing Automotive BluePark signed a "Strategic Cooperation Framework Agreement" with Huawei. The cooperation focused on Huawei's HI model, and the first model, the ARCFOX Alpha S HI version, was unveiled at the Shanghai Auto Show in April 2021. However, with a price point of around 400,000 yuan, sales undoubtedly fell short of both parties' expectations.

The cooperation between the two parties subsequently stagnated, and the key personnel leading the cooperation were mostly replaced.

The cooperation between Huawei's HI model and ARCFOX can be considered a failure.

There are many reasons for the failure, but here we will only share the facts. When the ARCFOX Alpha S HI version was launched, the non-HI version of the ARCFOX Alpha S was half the price. Meanwhile, the ARCFOX Alpha S also collaborated with Baidu Apollo to introduce the Apollo Moon edition.

Of course, regardless of the version, the ARCFOX Alpha S did not sell particularly well.

Huawei has also focused its efforts on its cooperation with SERES, and the popularity of the WENJIE brand has brought significant profits to SERES. Not only did SERES acquire the WENJIE trademark from Huawei for 2.5 billion yuan, but it also repurchased its own shares from Chongqing state-owned assets to achieve 100% ownership. Furthermore, SERES plans to invest 11.5 billion yuan to acquire a 10% stake in Huawei's Intelligent Automotive Solutions after its spin-off. It even achieved a profit of 1.625 billion yuan in the first half of 2024.

As the first automaker to embrace Huawei, Beijing Automotive BluePark witnessed the thriving development of SERES and quickly took action.

Indeed, Beijing Automotive BluePark has embraced a second opportunity to cooperate with Huawei by partnering in the Intelligent Selection model and launching a new independent brand, Enjoy World.

Capital increase of up to 10 billion yuan to seize the last chance for Enjoy World

On August 6, 2024, Enjoy World's first model, the S9, was officially launched.

According to the production and sales data released by Beijing Automotive BluePark in recent months, production increased from over 4,000 units in May to over 12,400 units in August, while sales also rose from over 5,000 units in May to over 13,000 units in August.

Announcements also indicated that mass production of the Enjoy World S9 began in June.

Public reports showed that on August 26, Yu Chengdong publicly announced that the Enjoy World S9 had secured 8,000 pre-orders within 20 days of its launch. For a pure electric vehicle priced between 399,800 and 449,800 yuan, or for Beijing Automotive BluePark, this is a remarkable achievement.

However, the Enjoy World S9 has recently faced significant public backlash, which we will not delve into here. For Beijing Automotive BluePark, the Enjoy World S9 is expected to introduce an extended-range version in the future, but its most direct competitor will likely be the Denza Z9. The short-term advantage of the Enjoy World S9 lies in its integration of Huawei's Kunpeng Intelligent Driving ADS 3.0, giving it an edge in intelligence. However, BYD has also partnered with Huawei, and their first model equipped with Kunpeng Intelligent Driving ADS 3.0 is the FANGCHENGBAO BAO 8.

As the first automaker to cooperate with Huawei, Beijing Automotive BluePark missed out on the opportunity to participate in the Intelligent Selection model, failing to fully leverage Huawei's comprehensive capabilities and losing out on the opportunity to collaborate on China's hottest-selling SUV model in the automotive market.

In the more competitive sedan segment, especially in the 56E market targeted by the Enjoy World S9's pricing, the challenge is formidable. This requires a stronger product offering to succeed.

A stronger product offering necessitates greater R&D investment. For Beijing Automotive BluePark, funding is likely to be a constraint. Over the past four and a half years, the company has incurred a cumulative loss of 25.161 billion yuan. The planned capital increase of up to 10 billion yuan will provide timely financial support to avoid delays due to insufficient funds in promoting the Enjoy World brand in collaboration with Huawei.

Amid the wave of automotive intelligence, cooperating with Huawei on the Enjoy World brand may be Beijing Automotive BluePark's last chance to remain in the game.

Whether Beijing Automotive BluePark can indeed stay in the game, or even secure a ticket to the next stage, will depend on the subsequent models and sales performance of the Enjoy World brand.

Regarding whether Beijing Automotive BluePark will invest in Huawei's Intelligent Automotive Solutions, with an estimated value of 115 billion yuan, it remains to be seen if the company has the financial means to do so. The planned capital increase of up to 10 billion yuan is insufficient to purchase even a 10% stake in Huawei's Intelligent Automotive Solutions.